Sample Business Contracts


Employment Agreement - Zale Corp. and Robert J. DiNicola

Employment Forms

  • Employers can customize an employment agreement that states the salary, benefits, working hours and other important provisions for their new or existing employee.
  • Answer simple questions to build a contract with a consultant. Specify the services rendered, when payment is due, as well as IP rights.
  • Employers who compensate their sales employees based on commissions can prepare an agreement to reduce misunderstandings by specifying the base salary and how commissions are calculated.
  • Companies may offer their business executives a contract that is different from the one provided to their regular employees. Executive employment agreements may be more complex because the compensation structure may include a combination of salary and commissions, provide for bonuses based on sales, stock or other financial targets, and include non-compete, confidentiality and severance provisions.
  • Independent sales representatives offer companies the potential to increase the sale of products or services without the burden of increasing headcount. Both parties should understand how commissions are calculated, when commissions will be paid, as well as how the representative will treat confidential information from the company and whether the representative may also sell a competing line of products or services.
  • More Employment Agreements


                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT


         THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the
"Agreement"), dated as of August 1, 2000, is by and between ZALE CORPORATION, a
Delaware corporation ("Company"), and ROBERT J. DINICOLA ("Executive").

         WHEREAS, Executive and Company are parties to that certain Amended and
Restated Employment Agreement, dated as of September 7, 1999; and

         WHEREAS, Executive and Company desire to amend and restate the Existing
Agreement in its entirety as set forth below.

         NOW, THEREFORE, in consideration of the foregoing recital and of the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

         1. Employment. Executive agrees to enter into the continued employment
of the Company, and the Company agrees to employ Executive, on the terms and
conditions set forth in this Agreement. Executive agrees during the term of this
Agreement to devote substantially all of his business time, efforts, skills and
abilities to the performance of his duties as stated in this Agreement and to
the furtherance of the Company's business.

                  Executive's job title will be Chairman of the Board and his
duties will be those as are designated by the Board of Directors of the Company
("Board"), consistent with the position of Chairman of the Board. Executive
further agrees to serve, without additional compensation, as an officer or
director, or both, of any subsidiary, division or affiliate of the Company or
any other entity in which the Company holds an equity interest, provided,
however, that (a) the Company shall indemnify Executive from liabilities in
connection with serving in any such position to the same extent as his
indemnification rights pursuant to the Company's Certificate of Incorporation,
By-laws and applicable Delaware law, and (b) such other position shall not
materially detract from the responsibilities of Executive pursuant to this
Section 1 or his ability to perform such responsibilities.

         2. Compensation.

                  (a) Base Salary. During the term of Executive's employment
with the Company pursuant to this Agreement, the Company shall pay to Executive
as compensation for his services an annual base salary of not less than $750,000
payable semi-monthly ("Base Salary"). Executive's Base Salary will be payable in
arrears in accordance with the Company's normal payroll procedures and will be
reviewed annually and subject to upward adjustment at the discretion of the
Board or an authorized Committee or representative thereof.

                  (b) Incentive Bonus. Executive's incentive compensation
program for the term of this Agreement shall be determined under the Company's
Executive Bonus Program,



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established by the Board in its discretion. Executive is eligible to receive up
to 50% of his Base Salary in accordance with the terms and conditions of the
Executive Bonus Program.

                  (c) Vacation. Executive shall be entitled to a reasonable
vacation of not less than 5 weeks each year of the term.

                  (d) Executive Perquisites. Executive shall be entitled to
receive such executive perquisites and fringe benefits as are provided to the
senior most executives and their families under any of the Company's plans
and/or programs in effect from time to time and such other benefits as are
customarily available to executives of the Company and their families.

                  (e) Club Membership. The Company shall pay all fees for
membership by Executive in a club of his choice, together with the dues therefor
for use by Executive for conferences, meetings and entertainment within the
scope of his employment.

                  (f) Tax Withholding. The Company has the right to deduct from
any compensation payable to Executive under this Agreement social security
(FICA) taxes and all federal, state, municipal or other such taxes or charges as
may now be in effect or that may hereafter be enacted or required.

                  (g) Life Insurance. In addition to the Company's group life
insurance coverage, the Company shall provide Executive with additional life
insurance coverage in the amount of $2,000,000.

                  (h) Medical Insurance. In addition to the Company's group
medical insurance coverage and/or Executive Medical Insurance Plan ("Medical
Plans"), the Company shall reimburse Executive for all additional medical
expenses incurred by Executive which are defined as reimbursable under the
Company's Medical Plans.

                  (i) Expense Reimbursements. The Company shall pay or reimburse
Executive for all reasonable business expenses incurred or paid by Executive in
the course of performing his duties hereunder, including but not limited to
reasonable travel expenses for Executive and his spouse. As a condition to such
payment or reimbursement, however, Executive shall maintain and provide to the
Company reasonable documentation and receipts for such expenses.

         3. Term. Unless sooner terminated pursuant to Section 4 of this
Agreement, and subject to the provisions of Section 5 hereof, the term of this
Agreement shall commence as of the date hereof and shall continue until
September 6, 2001.

         4. Termination. Notwithstanding the provisions of Section 3 hereof, but
subject to the provisions of Section 5 hereof, this Agreement (and Executive's
employment hereunder) shall terminate as follows:

                  (a) Death. This Agreement shall terminate upon the death of
Executive; provided, however, that the Company shall continue to pay (in
accordance with its normal



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payroll procedures) the Base Salary to Executive's estate for a period of twelve
(12) months after the date of Executive's death.

                  (b) Termination for Cause. The Company may terminate this
Agreement at any time for "Cause" (as hereinafter defined) by delivering a
written termination notice to Executive. For purposes of this Agreement, "Cause"
shall mean any of: (i) Executive's conviction of a felony or a crime involving
moral turpitude; (ii) Executive commits an act constituting fraud, deceit or
material misrepresentation with respect to the Company; (iii) Executive
embezzles funds or assets from the Company; (iv) Executive becomes addicted to
any alcoholic, controlled or illegal substance or drug; (v) Executive commits
any act or omission which would give the Company the right to terminate
Executive's employment under applicable law; or (vi) Executive fails to correct
or cure any material breach of or default under this Agreement within ten (10)
days after receiving written notice of such breach or default from the Company.

                  (c) Termination Without Cause. The Company may terminate this
Agreement at any time by delivering a written termination notice to Executive.

                  (d) Termination by Executive. Executive may terminate this
Agreement at any time by delivering ninety (90) days prior written notice to the
Company; provided, however, that the terms, conditions and benefits specified in
Section 5 hereof shall apply or be payable to Executive if such termination
occurs for any of the following reasons:

                           (i) the assignment to the Executive by the Company of
                  duties inconsistent with, or the reduction of the powers and
                  functions associated with, Executive's position, duties,
                  responsibilities and status with the Company or an adverse
                  change in Executive's title or office, unless such action is
                  the result of Executive's failure to meet preestablished and
                  objective performance criteria or termination of employment
                  for Disability or Cause;

                           (ii) any material breach by the Company of any
                  provision of this Agreement; or

                           (iii) Executive elects to retire from his employment
                   with the Company effective at any time on or after September
                   6, 2000.

                  (e) Termination Following Disability. In the event, Executive
becomes mentally or physically impaired or disabled and is unable to perform his
material duties and responsibilities hereunder for a period of at least ninety
(90) days in the aggregate during any one hundred twenty (120) consecutive day
period, the Company may terminate this Agreement by delivering a written
termination notice to Executive. Notwithstanding the foregoing, Executive shall
continue to receive his full salary and benefits under this Agreement for a
period of twelve (12) months after the effective date of such termination.

                  (f) Payments. Following any expiration or termination of this
Agreement, and in addition to any amounts owed pursuant to Section 5 hereof, the
Company shall pay to



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Executive all amounts earned by Executive hereunder prior to the date of such
expiration or termination.

         5. Certain Termination Benefits. Notwithstanding anything else
contained herein to the contrary, in the event (i) either the Company or
Executive elects not to renew the term of this Agreement pursuant to Section 3
hereof, (ii) this Agreement is terminated by reason of Executive's death
pursuant to Section 4(a), (iii) the Company terminates this Agreement without
cause pursuant to Section 4(c), (iv) Executive terminates this Agreement for
Good Reason pursuant to Section 4(d), or (v) the Company terminates this
Agreement due to Executive's disability pursuant to Section 4(e), then, to the
extent applicable:

                  (a) Base Salary and Bonus. Within thirty (30) days of the
expiration or termination of this Agreement, the Company shall pay to Executive
a lump sum amount equal to the Base Salary (as in effect as of the date of such
expiration or termination) and a 50% bonus payment.

                  (b) Stock. On and as of the effective date of the expiration
or termination of this Agreement, all of Executive's outstanding stock options
and restricted stock grants under the Zale Corporation Omnibus Stock Incentive
Plan shall immediately vest.

                  (c) Supplemental Executive Retirement Plan. On and as of the
effective date of the expiration or termination of this Agreement, all of
Executive's benefits under the Zale Delaware, Inc. Supplemental Executive
Retirement Plan ("SERP") shall immediately vest. In addition, Executive shall
have a period of sixty (60) days after the effective date of such termination or
expiration to require the Company (by delivering written notice thereof) to make
a cash payment to Executive in an amount equal to the value of such benefits, in
which case the Company shall make such payment within ninety (90) days after the
effective date of such termination or expiration. In the event Executive fails
to require the Company to make such cash payment in accordance with the
preceding sentence, then Executive shall be entitled to receive such benefits as
and when provided in the SERP.

                  (d) Life Insurance. The Company shall continue to provide
Executive with group and additional life insurance coverage until Executive's
death pursuant to Section 2(g).

                  (e) Medical Insurance. The Company shall continue to provide
Executive and his family with group medical insurance coverage under the
Company's Medical Plans (as the same may change from time to time) or other
substantially similar health insurance, as well as all additional medical
expenses incurred by Executive which are defined as reimbursable under such
Medical Plans, until Executive's death.

                  (f) Group Disability. The Company shall continue to provide
Executive coverage under the Company's group disability plan at all times during
the term of the Consulting Agreement contemplated by Section 5(i) hereof.



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                  (g) Office. Executive shall be entitled to retain the cellular
telephone and the home office computer equipment provided to him by the Company;
provided, however, that Executive shall be responsible for the payment of all of
his cellular telephone bills, except for those expenses incurred for business
purposes. In addition, at Executive's request, the Company shall provide
Executive with an office at the Company's principal executive offices.

                  (h) Automobile. During the forty-five (45) day period
following the expiration or termination of this Agreement, Executive shall be
entitled to purchase from the Company, at the Company's book value therefor, the
automobile provided to him by the Company. In the event Executive does not elect
to purchase the automobile within such forty-five (45) period, then Executive
agrees to promptly return the automobile to the Company.

                  (i) Relocation. In the event that Executive desires to
relocate his home and family to an area outside of Dallas County, Texas, within
the twelve (12) month period following the expiration or termination of the
Consulting Agreement described in Section 5(j) below, then Company shall
reimburse Executive for all reasonable and appropriate moving and other expenses
actually incurred by him in connection with such move and approved by the
Compensation Committee of the Board.

                  (j) Consulting Agreement. In the event (i) either the Company
or Executive elects not to renew this Agreement pursuant to Section 3 or (ii)
Executive terminates this Agreement pursuant to Section 4(d)(iii), Executive and
Company shall enter into, as of the effective date of the expiration or
termination of this Agreement, a Consulting Agreement in the form attached
hereto as Exhibit A.

                  (k) Offset. Any fringe benefits received by Executive in
connection with any other employment that are reasonably comparable, but not
necessarily as beneficial, to Executive as the fringe benefits then being
provided by the Company pursuant to this Section 5, shall be deemed to be the
equivalent of, and shall terminate the Company's responsibility to continue
providing, the fringe benefits then being provided by the Company pursuant to
this Section 5. The Company acknowledges that if Executive's employment with the
Company is terminated, Executive shall have no duty to mitigate damages.

                  (1) General Release. Acceptance by Executive of any amounts
pursuant to this Section 5 shall constitute a full and complete release by
Executive of any and all claims Executive may have against the Company, its
officers, directors and affiliates, including, but not limited to, claims he
might have relating to Executive's cessation of employment with the Company;
provided, however, that there may properly be excluded from the scope of such
general release the following:

                           (i) claims that Executive may have against the
                  Company for reimbursement of ordinary and necessary business
                  expenses incurred by him during the course of his employment;

                           (ii) claims that may be made by the Executive for
                  payment of Base Salary, fringe benefits or stock options
                  properly due to him; or



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                            (iii) claims respecting matters for which the
                   Executive is entitled to be indemnified under the Company's
                   Certificate of Incorporation or Bylaws, respecting third
                   party claims asserted or third party litigation pending or
                   threatened against the Executive.

A condition to Executive's receipt of any amounts pursuant to this Section 5
shall be Executive's execution and delivery of a general release as described
above. In exchange for such release, the Company shall, if Executive's
employment is terminated without Cause, provide a release to Executive, but only
with respect to claims against Executive which are actually known to the Company
as of the time of such termination.

         6. Effect of Change in Control.

                  (a) If within two years following a "Change of Control" (as
hereinafter defined), Executive terminates his employment with the Company for
Good Reason (as hereinafter defined) or the Company terminates Executive's
employment for any reason other than Cause or disability, the Company shall pay
to the Executive: (1) an amount equal to three (3) times the Executive's Base
Salary as of the date of termination; (2) an amount equal to three (3) times the
average annual cash bonus paid to Executive for the two fiscal years immediately
preceding the date of termination; (3) all benefits under the Company's various
benefit plans, including group healthcare, dental and life, for the period equal
to thirty-six (36) months from the date of termination; and (4) a lump sum
payment equal to the actuarial equivalent (determined by the Company in good
faith with assistance of its accountants or actuaries), of the benefit which
would have accrued under the SERP if (i) Executive remained a participant in the
SERP for the three (3) year period commencing on the first day of the SERP's
plan year ("Plan Year") in which the Executive's employment with the Company
terminated ("Measurement Period"), (ii) during each Plan Year in the Measurement
Period the Executive earned benefit points equal to the highest number of the
benefit points earned by such Executive in a Plan Year during the three (3) year
period ending on the last day of the Plan Year immediately preceding the Plan
Year in which his employment with the Company terminated, and (iii) the
Executive's final average pay during the Measurement Period is the greater of
his monthly Base Salary on the date of (A) a Potential Change of Control, (B)
the Change of Control or (C) the date of his termination of employment.

                  (b) "Change of Control" shall mean the date as of which: (i)
there shall be consummated (1) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (2) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (ii) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; or (iii) any person (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial



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owner (within the meaning of Rule 13d-3 under the Exchange Act) of 30% of the
Company's outstanding common stock; or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constitute the entire
board of directors of the Company shall cease for any reason to constitute a
majority thereof unless the election, or the nomination for election by the
Company's stockholders, of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period.

         (c) "Good Reason" shall mean any of the following actions taken by the
Company without the Executive's written consent after a Change of Control:

                  (i) the assignment to the Executive by the Company of duties
         inconsistent with, or the reduction of the powers and functions
         associated with, the Executive's position, duties, responsibilities and
         status with the Company immediately prior to a Change of Control or
         Potential Change of Control (as defined below), or an adverse change in
         Executive's titles or offices as in effect immediately prior to a
         Change of Control or Potential Change of Control, or any removal of the
         Executive from or any failure to re-elect Executive to any of such
         positions, except in connection with the termination of his employment
         for Disability or Cause or as a result of Executive's death or by the
         Executive other than for Good Reason;

                  (ii) A reduction by the Company in the Executive's Base Salary
         as in effect on the date of a Change of Control or Potential Change of
         Control, or as the same may be increased from time to time during the
         term of his Agreement, or the Company's failure to increase (within 12
         months of Executive's last increase in base salary) the Executive's
         base salary after a Change of Control or Potential Change of Control,
         unless such failure is the result of (A) a hiring or salary freeze
         uniformly applied to all employees or (B) Executive's failure to meet
         preestablished and objective performance criteria;

                  (iii) Company's principal executive offices shall be moved to
         a location outside Irving, Dallas County, Texas;

                  (iv) Company shall require the Executive to be based anywhere
         other than at the Company's principal executive offices or the location
         where the Executive is based on the date of a Change of Control or
         Potential Change of Control, or if Executive agrees to such relocation,
         the Company fails to reimburse the Executive for moving and all other
         expenses incurred with such move;

                  (v) The Company shall fail to continue in effect any
         Company-sponsored plan or benefit that is in effect on the date of a
         Change of Control or Potential Change of Control, and provides (A)
         incentive or bonus compensation, (B) fringe benefits such as vacation,
         medical benefits, life insurance and accident insurance, (C)
         reimbursement for reasonable expenses incurred by the Executive in
         connection with the performance of duties with the Company, and (D)
         pension benefits such as a Code Section 401(k) plan;



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                  (vi) Any material breach by the Company of any provision of
         this Agreement; and

                  (vii) Any failure by the Company to obtain the assumption of
         this Agreement by any successor or assign of the Company effected in
         accordance with the provisions of Section 6.

         (d) "Potential Change of Control" shall mean the date as of which (1)
the Company enters into an agreement the consummation of which, or the approval
by shareholders of which, would constitute a Change of Control; (ii) proxies for
the election of Directors of the Company are solicited by anyone other than the
Company; (iii) any person (including, but not limited to, any individual,
partnership, joint venture, corporation, association or trust) publicly
announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; or (iv) any other event
occurs which is deemed to be a Potential Change of Control by the Board and the
Board adopts a resolution to the effect that a Potential Change of Control has
occurred.

         (e) In the event that (i) Executive would otherwise be entitled to the
compensation and benefits described in Section 6(a) hereof ("Compensation
Payments"), and (ii) the Company determines, based upon the advice of tax
counsel selected by the Company's independent auditors and acceptable to
Executive, that, as a result of such Compensation Payments and any other
benefits or payments required to be taken into account under Code Section
280G(b)(2) ("Parachute Payments"), any of such Parachute Payments would be
reportable by the Company as "excess parachute payments", such Compensation
Payments shall be reduced to the extent necessary to cause Executive's Parachute
Payments to equal 2.99 times the "base amount" as defined in Code Section
280G(b)(3) with respect to such Executive. However, such reduction in the
Compensation Payments shall be made only if, in the opinion of such tax counsel,
it would result in a larger Parachute Payment to the Executive than payment of
the unreduced Parachute Payments after deduction of tax imposed on and payable
by the Executive under Section 4999 of the Code ("Excise Tax"). The value of any
non-cash benefits or any deferred payment or benefit for purposes of this
paragraph shall be determined by the Company's independent auditors.

         (f) The parties hereto agree that the payments provided under Section
6(a) above, as the case may be, are reasonable compensation in light of
Executive's services rendered to the Company and that neither party shall
contest the payment of such benefits as constituting an "excess parachute
payment" within the meaning of Section 280G(b)(l) of the Code.

         (g) Unless the Company determines that any Parachute Payments made
hereunder must be reported as "excess parachute payments" in accordance with
Section 6(e) above, neither party shall file any return taking the position that
the payment of such benefits constitutes an "excess parachute payment" within
the meaning of Section 280G(b)(l) of the Code.



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         7. Non-Competition. Executive agrees that during the term of this
Agreement and for a period of eighteen (18) months from the date of the
termination of Executive's employment with the Company pursuant to Sections
4(c), 4(d) and 6 herein or for any other reason that results in the Executive
being entitled to the benefits described in Section 5, he will not, directly or
indirectly, compete with the Company by providing to any company that is in a
"Competing Business" services substantially similar to the services currently
being provided by Executive. Competing Business shall be defined as any business
that engages, in a material way, in the wholesale or retail sale of jewelry in
the United States, and Executive's employment function or affiliation is
directly or indirectly in such business of jewelry. Executive shall not be
obligated to abide by the foregoing covenant if the Company defaults in the
payment of any severance compensation or benefits.

         8. Nonsolicitation of Employees. For a period of two years after the
termination or cessation of his employment with the Company for any reason
whatsoever, Executive shall not, on his own behalf or on behalf of any other
person, partnership, association, corporation, or other entity, solicit or in
any manner attempt to influence or induce any employee of the Company or its
subsidiaries or affiliates (known by the Executive to be such) to leave the
employment of the Company or its subsidiaries or affiliates, nor shall he use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of the Company concerning the names
and addresses of the Company's employees.

         9. Nondisclosure of Trade Secrets. During the term of this Agreement,
Executive will have access to and become familiar with various trade secrets and
proprietary and confidential information of the Company, its subsidiaries and
affiliates, including, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer requirements,
pricing techniques, customer lists, methods of doing business and other
confidential information (collectively, referred to as "Trade Secrets") which
are owned by the Company, its subsidiaries and/or affiliates and regularly used
in the operation of its business, and as to which the Company, its subsidiaries
and/or affiliates take precautions to prevent dissemination to persons other
than certain directors, officers and employees. Executive acknowledges and
agrees that the Trade Secrets (1) are secret and not known in the industry; (2)
give the Company or its subsidiaries or affiliates an advantage over competitors
who do not know or use the Trade Secrets; (3) are of such value and nature as to
make it reasonable and necessary to protect and preserve the confidentiality and
secrecy of the Trade Secrets; and (4) are valuable, special and unique assets of
the Company or its subsidiaries or affiliates, the disclosure of which could
cause substantial injury and loss of profits and goodwill to the Company or its
subsidiaries or affiliates. Executive may not use in any way or disclose any of
the Trade Secrets, directly or indirectly, either during the term of this
Agreement or at any time thereafter, except as required in the course of his
employment under this Agreement, if required in connection with a judicial or
administrative proceeding, or if the information becomes public knowledge other
than as a result of an unauthorized disclosure by the Executive. All files,
records, documents, information, data and similar items relating to the business
of the Company, whether prepared by Executive or otherwise coming into his
possession, will remain the exclusive property of the Company and may not be
removed from the premises of the Company under any circumstances without the
prior written consent of the Board (except in the ordinary course of business
during Executive's period of active employment under this Agreement), and in any
event must be



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promptly delivered to the Company upon termination of Executive's employment
with the Company. Executive agrees that upon his receipt of any subpoena,
process or other request to produce or divulge, directly or indirectly, any
Trade Secrets to any entity, agency, tribunal or person, Executive shall timely
notify and promptly hand deliver a copy of the subpoena, process or other
request to the Board. For this purpose, Executive irrevocably nominates and
appoints the Company (including any attorney retained by the Company), as his
true and lawful attorney-in-fact, to act in Executive's name, place and stead to
perform any act that Executive might perform to defend and protect against any
disclosure of any Trade Secrets.

         10. Severability. The parties hereto intend all provisions of Sections
7, 8 and 9 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Sections 7, 8 or 9 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. In addition, however,
Executive agrees that the nonsolicitation and nondisclosure agreements set forth
above each constitute separate agreements independently supported by good and
adequate consideration shall be severable from the other provisions of, and
shall survive, this Agreement. The existence of any claim or cause of action of
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants of Executive contained in the nonsolicitation and nondisclosure
agreements. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such illegal, invalid or unenforceable provision never
constituted a part of this Agreement; and the remaining provisions of this
Agreement shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance herefrom.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or enforceable provision as may be possible and be legal,
valid and enforceable.

         11. Arbitration - Exclusive Remedy.

                  (a) The parties agree that the exclusive remedy or method of
resolving all disputes or questions arising out of or relating to this Agreement
shall be arbitration. Arbitration shall be held in Dallas, Texas by three
arbitrators, one to be appointed by the Company, a second to be appointed by
Executive, and a third to be appointed by those two arbitrators. The third
arbitrator shall act as chairman. Any arbitration may be initiated by either.
party by written notice ("Arbitration Notice") to the other party specifying the
subject of the requested arbitration and appointing that party's arbitrator.

                  (b) If (i) the non-initiating party fails to appoint an
arbitrator by written notice to the initiating party within ten days after the
Arbitration Notice, or (ii) the two arbitrators appointed by the parties fail to
appoint a third arbitrator within ten days after the date of the appointment of
the second arbitrator, then the American Arbitration Association, upon
application of the initiating party, shall appoint an arbitrator to fill that
position.



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                  (c) The arbitration proceeding shall be conducted in
accordance with the rules of the American Arbitration Association. A
determination or award made or approved by at least two of the arbitrators shall
be the valid and binding action of the arbitrators. The costs of arbitration
(exclusive of the expense of a party in obtaining and presenting evidence and
attending the arbitration and of the fees and expenses of legal counsel to a
party, all of which shall be borne by that party) shall be borne by the Company
only if Executive receives substantially the relief sought by him in the
arbitration, whether by settlement, award or judgment; otherwise, the costs
shall be borne equally between the parties. The arbitration determination or
award shall be final and conclusive on the parties, and judgment upon such award
may be entered and enforced in any court of competent jurisdiction.

         12. Miscellaneous.

                  (a) Notices. Any notices, consents, demands, requests,
approvals and other communications to be given under this Agreement by either
party to the other must be in writing and must be either (i) personally
delivered, (ii) mailed by registered or certified mail, postage prepaid with
return receipt requested, (iii) delivered by overnight express delivery service
or same-day local courier service, or (iv) delivered by telex or facsimile
transmission, to the address set forth below, or to such other address as may be
designated by the parties from time to time in accordance with this Section
12(a):

         If to the Company:    Zale Corporation
                               901 West Walnut Hill Lane
                               Irving, Texas 75038
                               Attention: Alan P. Shor, Chief Operating Officer

         If to Executive:      Robert J. DiNicola
                               3535 Gillespie Avenue, Apt. 5-B
                               Dallas, Texas 75219

                  Notices delivered personally or by overnight express delivery
service or by local courier service are deemed given as of actual receipt.
Mailed notices are deemed given three business days after mailing. Notices
delivered by telex or facsimile transmission are deemed given upon receipt by
the sender of the answer back (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).

                  (b) Entire Agreement. This Agreement supersedes any and all
other agreements, either oral or written, between the parties with respect to
the subject matter of this Agreement and contains all of the covenants and
agreements between the parties with respect to the subject matter of this
Agreement.

                  (c) Modification. No change or modification of this Agreement
is valid or binding upon the parties, nor will any waiver of any term or
condition in the future be so binding, unless the change or modification or
waiver is in writing and signed by the parties to this Agreement.



                                       11
<PAGE>   12


                  (d) Governing Law and Venue. The parties acknowledge and agree
that this Agreement and the obligations and undertakings of the parties under
this Agreement will be performable in Irving, Dallas County, Texas. This
Agreement is governed by, and construed in accordance with, the laws of the
State of Delaware. If any action is brought to enforce or interpret this
Agreement, venue for the action will be in Irving, Dallas County, Texas.

                  (e) Counterparts. This Agreement may be executed in
counterparts, each of which constitutes an original, but all of which
constitutes one document.

                  (f) Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, each party shall bear its own
costs and expenses.

                  (g) Estate. If Executive dies prior to the expiration of the
term of employment or during a period when monies are owing to him, any monies
that may be due him from the Company under this Agreement as of the date of his
death shall be paid to his estate and as when otherwise payable.

                  (h) Assignment. The Company shall have the right to assign
this Agreement to its successors or assigns. The terms "successors" and
"assigns" shall include any person, corporation, partnership or other entity
that buys all or substantially all of the Company's assets or all of its stock,
or with which the Company merges or consolidates. The rights, duties and
benefits to Executive hereunder are personal to him, and no such right or
benefit may be assigned by him.

                  (i) Binding Effect. This Agreement is binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and permitted assigns.

                  (j) Waiver of Breach. The waiver by the Company or Executive
of a breach of any provision of this Agreement by Executive or the Company may
not operate or be construed as a waiver of any subsequent breach.





                                       12
<PAGE>   13


         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                  "Company"

                                  ZALE CORPORATION


                                  By: /s/ ALAN P. SHOR
                                     -------------------------------------
                                  Name:   Alan P. Shor
                                       -----------------------------------
                                  Title: Executive Vice President and
                                        ----------------------------------
                                         Chief Operating Officer
                                        ----------------------------------

                                  By:/s/ RICHARD L. MARCUS
                                     -------------------------------------
                                  Name:  Richard L. Marcus
                                       -----------------------------------
                                  Title:  Chairman, Compensation Committee


                                  "Executive"

                                  /s/ ROBERT J. DINICOLA
                                  ----------------------------------------
                                  Robert J. DiNicola






                                       13

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